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Express reports mixed earnings, inventory challenges

Yahoo Finance Live anchors discuss second-quarter earnings for Express.

Video Transcript

BRIAN SOZZI: Welcome back. As we await the opening bell here on Wednesday, let's dive into some more earnings reports, because the season just keeps rolling right along. Let's look at some stocks on the Yahoo Finance trending ticker page. We're locking in on shares of clothing retailer Express. After reporting earnings beating on the bottom line, but failing to meet revenue expectations, the company lowered its guidance for the rest of the year, and anticipates same-store sales to decrease by mid single-digit percentages.

Brad, I can't believe Express shares are $1.80. Tim Baxter-- we've had him on the show a good number of times-- he has, in fact, turned this company around. It's just, the street has not given him, I would argue, the credit he deserves. Not that bad of a quarter, relatively speaking. Look at the results we've seen throughout retail lately. This quarter wasn't that bad, but as our inventory expert Connor Hickey called up earlier this morning, inventory up 30% for Express, year over year. That's going to get the stock dinged.

BRAD SMITH: You know, I think the tough thing with Express is the tier that they really compete in here-- you're competing both in between some of the fast-fashion apparel manufacturers and retailers, but then you're also competing on the low end, versus just a Target or a Walmart that people can get some of those basics at as well, in a tandem purchase, when they're already searching for groceries, or searching for some other home item that they need to get. And so with all of that considered, Express-- with those items, plus, yeah, suits, which you could get at [INAUDIBLE]

BRIAN SOZZI: I used to get my suits there all the time.

BRAD SMITH: Really? Interesting.

BRIAN SOZZI: I can't--

BRAD SMITH: Well, they had a big partnership with Steph Curry, back in the day. They were making a huge push with those partnerships, with athletes, and really driving some of that foot traffic, driving some of the fanfare. And I think at that time, when people were really-- we were seeing a switch from some of the baggy suits that used to be wore, to some of the more trim-- some of the, as they would say, the European cut, I guess. And so for Express, that was an interim period aggregator, for some of that foot traffic, and a successful campaign. But did it sustain over time? And the answer, right now, is no.

BRIAN SOZZI: I can't wear the Express suits anymore. They're a little too trendy for me. I've entered this decade of my life where I have to, I guess, look a little more professional. Maybe trade up to some more premium suits. But man, I love those Express suits. I would go and buy them now if I could. I just don't know where I'd wear them.

BRAD SMITH: Here's the thing. It's really just the cut in the back of the suit for me.

BRIAN SOZZI: Cut in the back of the suit.

BRAD SMITH: Yeah. That really doesn't work. But in terms of some of the figures right now, I do want to point out that they drove record Express factory outlet stores revenue for a second quarter, and increased comp sales by 2%. I think that's critical to note here, only because you've got something different that was said from a Nordstrom Rack. Sure, different price points that you're looking at, but it also does tell you a little bit about where the consumer is still spending some of those dollars. And they're looking for deals right now.

BRIAN SOZZI: They are looking for deals. You know, I'm surprised. A lot of the outlet results from these earnings season, they haven't been that great. This one? Not that bad.